September 24, 2019

Pangasius prices nosedive; recovery in H2 dim

Prices of pangasius have nosedived, pushing into the red some previously profitable producers in the Mekong Delta, who have been buffeted by higher production costs due to higher feed prices; higher labour costs due to workforce shortage; and higher cost of electricity, which increased by 8.4% in March.

Over the first six months, prices fell by 35% compared with the record levels achieved in 2018, according to Globefish, the analytical and informational arm on world fish trade of the UN Food and Agriculture Organisation.

Export prices in mid-June were being quoted at US$2.35 (FOB Ho Chi Minh) per kilogramme for fillets, steeply declining from the peak of $3.40/kg near the end of 2018. Most traders attributed this drop to a slowdown in orders from China and the US, combined with the additional supply volumes in 2019.

Vietnamese production in 2019 is expected to increase to around 1.5 million tonnes from 1.3 million tonnes in 2018, which was a record year in terms of harvests. This year's anticipated higher supply volume results from the widespread investment and expansion projects, which were spurred by the 2018 high price levels.

Vietnamese pangasius marketers in the EU have also been struggling against poor consumer perception, as well as stringent product requirements and regulatory issues. Despite the challenges, efforts to ensure and communicate the sustainability, quality and safety of Vietnamese pangasius have been met with success in some EU markets, Globefish said.

Hopes that pangasius prices will recover in in the second half are dim due to the increased supply volumes and the reduced purchasing activity in the important Chinese and US markets. Profitability at the farm level will consequently be much reduced, Globefish says.